2021 has been another challenging year. The pace will only hasten with many end of year events so even the mention of getting ready for taxes is sure to bring some level of anxiety. Unless it is an opportunity for an end of the year write-off (Section 179).
Section 179 of the IRS code allows small businesses to write off 100 percent of the cost of depreciable business equipment instead of capitalizing and depreciating the asset over a period of time. This includes capital equipment, furniture, vehicles, computers, and software. It provides the distinct advantage of being able to reduce one’s tax burden immediately instead of over a longer period of time. It is like a Black Friday sale for business expenses.
For example, if a veterinary practice with a tax bracket of 35%, purchases a piece of equipment for $25,000, then they would reduce their tax liability by $8,750.
| Purchase Cost | $25,000 |
| Assumed Tax Bracket | 35% |
| Section 179 Allowable Deduction | $25,000 |
| Reduced tax liability when electing Section 179 | $8,750 |
| Effective System Cost after Section 179 election | $16,250 |
Like all IRS codes, there are of course, restrictions. The investment must occur within the designated tax year. It needs to be purchased and not leased, rented, or gifted. It also needs to be considered property used primarily for business purposes. It cannot be land, buildings, heating/cooling systems, and is limited to certain vehicles. Lastly, any percentage of personal use is deducted from the write-off.
When considering a purchase of LexaGene’s MiQLab, a section 179 election may result in a tax savings, with a direct impact on net profit and ROI.
Because every case is different, it is recommended you speak with your tax professional to see what is best for your practice. For more information on the benefits of MiQLab and how it can increase your practice’s efficiency and profitability, contact vetsales@lexagene.com.
Download our Economics of Pet Ownership, Clinic Efficiency, and Veterinary Diagnostics Infographic.
